The US has its debt downgraded, UK inflation suddenly falls, the Eurozone interest rate rises and China's growth stabilises. Ordinary people across the world are faced with a wealth of economic news, but are their own decisions on money really governed by emotion?

Money is emotional. Debt sparks worry. A windfall is exciting. And many people dose up on retail therapy, shopping to feel better.

"Ask people what emotions are most frequently associated with money, and this is the rank-ordered list: anxiety, depression, anger, helplessness, happiness, excitement, envy, resentment," says psychologist Adrian Furnham.

He is co-creator of BBC Lab UK's new Big Money Test, which explores links between personality and money behaviour.

Because even financially astute people have bad money habits, he says, and there are five archetypes:

What's your money personality?

misers fear becoming penniless and have trouble enjoying the benefits of their money

spenders shop in an often uncontrolled manner, particularly when feeling low - and get a short-lived high, often followed by guilt

tycoons see money as a route to power and approval, and believe wealth will make them happy

bargain hunters feel superior when they get discounts, and feel angry if expected to pay full price

gamblers feel exhilarated when taking chances, and find it hard to stop - even when losing - as a win brings a sense of power.

Brian Capon, who in the 1970s was assistant manager at Midland bank branches in the UK says state of mind affects the way people approach financial decisions.

"Someone who has just found the car or house of their dreams can be so focused on borrowing the cash to buy it that they might not be too bothered about the interest rate they pay, or how accurate the information is.

'Mood' spending had to be in cash - so if you didn't have the cash, you couldn't spend itBrian Capon on the 1970s

"Often the focus can be much more on getting the cash rather than whether they can afford to repay it," says Capon, who now works for the British Bankers' Association.

"The manager or assistant manager used to look through all the credit slips and cheques every day, and over a period of time could build up a picture of customers' spending habits.

"The general feeling was that you shouldn't spend what you didn't have, and you should save up to buy something you wanted. Because not many people had a bank account or easy access to credit, 'mood' spending had to be in cash - so if you didn't have the cash, you couldn't spend it."

How times have changed.

Britain's debt mountain, including mortgages and credit cards, is £1.46tn, close to a record high - even though homeowners paid off more of their mortgage borrowings in 2010 than in any other single year.

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Instead of spending, many are paying off mortgages

Levels of personal debt started to shoot up in the 1980s when relaxation of the rules made lending and borrowing far easier than ever before. But this hasn't been matched with success in educating people to manage their money well.

Too many people are in denial about their finances, he says, because thinking about it makes them feel bad.

"In Britain we have a tendency to be spenders rather than misers. People get locked into a lifestyle they can't afford. They should meet somebody who's been made bankrupt and find out how awful it is."

In Britain we have a tendency to be spenders rather than misersJames Daley, Which? money editor

The government should switch from campaigns, like patiently explaining annual percentage rate on loans, to shock tactics, he says.

"I'm surprised we don't have public safety films about over-spending and debt like the ones for smoking. That would break through to the older generations."

Open University psychologist Mark Fenton-O'Creevy, another co-designer of the money test, says a little knowledge can be a dangerous thing.

"People whose higher education had a financial component are more likely to make mistakes with their investments. They think they know what they're doing, and make rash choices.

"Think about how people get into financial trouble. A person told their credit card is about to be taken away because of serious debt cheers themselves up with a spending spree while they've still got it."

Image caption
The national pastime

They know this will put further strain on their parlous finances, but shopping is their way of dealing with stress of debt.

He's involved in the pan-European project xDelia to test whether innovative techniques such as immersive games might help people gain the necessary skills to make better financial decisions.

The aim of the money test is to test the theory that how we manage our emotions - particularly when stressed or in an unpleasant situation - affects how we manage our money.

Because knowing what APR means - or how to work out the best discount, or read a bank statement - is just a part of it.